"Market, Capital, State"
is a big chunk to chew, so big that for a long time
I could not utter even a few words on these topics.
As a way to get started, I pick an issue of "The Economist"
and comment on that.

The Economist April 23, 2016

The covers blares out: "Can she fix it?" The illustration
makes sure we get the referents of the "she" and the "it":
a car mechanic being presented
with a huge motor, rusty and dripping black oil, in the shape
of a map of the contiguous forty-eight states.
The subtitle of the cover rounds out the complex of allusions
by "Hilary Clinton and the American economy".

Here we go again. In the 1992 presidential campaign
the de facto slogan of the victorious Democrats was
"It's the economy, stupid."
Both stupid and clever. Clever because of the wide-spread
notion that presidents can fix economies.
Stupid because the notion is a delusion.
This is just what we would expect from a typical media outlet.
It's worrying that The Economist seems to be prey to this
delusion.

April 16 is indeed a Clinton issue. Apart from the cover
there is a Leader and the Briefing on Clinton.
The latter is entirely about campaign tactics,
so has become irrelevant by the time you read this.
The Leader touches on issues that are more worthy of attention.

The author of the Leader on Clinton is fortunately not the person
responsible for the cover:
in the Leader there is skepticism about the notion
that presidents can fix economies.

A typical Clinton speech on the economy contains some reflections
on the tornadoes of globalisation and automation that have torn up
opportunities for less-skilled workers, then culminates in a proposal
to introduce a minuscule, two-year tax credit for companies to
encourage profit-sharing schemes. This risks repeating the worst
parts of 1990s Clintonomics, which added a slew of micro-measures
to America's over-complicated tax code.

Hear, hear.
In an ideal version of American society a president cannot do
much to improve the economy (whatever "improvement"
means—not just up the GDP, I hope).
But the government can do a lot to damage the economy
by pandering to popular misunderstandings:
(1) adding to the complexity of tax code and (2) patching up big
defects in legislation.
(1) needs no elaboration: everyone who files an income
tax return is confronted every year
with frills added over the
years by what some politician perceived as popular pressure.
(2) is more worthy of attention.
As for defects in legislation, let's have a look at
what's wrong with the financial sector.

In most Western economies today, the assets and liabilities of banks
exceed the assets alnd liabilities of the government and the
aggregate annual income of everyone in the country. But these
assets and liabilities are mainly obligations from and to other
financial istitutions. Lending to firms and individuals
engaged in the productions of goods and
services—which most people would imagine was the principal
business of a bank—amounts to less than ten percent
of that total [John Kay: "Other People's Money", Public Affairs,
New York, 2015, page 1.]

This bare fact is a tip of a huge iceberg.
The iceberg is the evolution of banking from 1929 to 2008.
Soon after 1929 the financial sector collapsed,
with disastrous effects for the economy.
In response the Glass-Steagall Act of 1933 separated commercial
from investment banking.
The payments system, on which we all depend to
buy food and perform other urgent transactions,
falls under commercial banking.
This is what the above-quoted Kay calls "The Utility".
Initial public offerings, mergers and acquisitions
are activities typical of investment banking.
This what Kay call "The Casino".
The abuses rectified by Glass-Steagall in 1933 included
that deposits generated by the commercial banking arm
were used to finance investment-banking activities.
As a result failure in the latter brought down a part
of the payments system.
The Glass-Steagall act separated commercial banking from
investment banking.
This naturally irked certain powerful interests.
Until around 1980 these remained impotent.
In the political climate of Thatcher and Reagan
it became politically feasible to dismantle Glass-Steagall
bit by bit until by 1999 its last vestiges were demolished.

In the early 1930s payments-system failures occurred bit by bit
over a period of a few years.
The result was wide-spread severe poverty.
In the 2008 the effect would have been total collapse
(imagine what would happen if bank cards stopped working).
As a result the payments system was rescued at huge cost to
the tax payer, without anything being done about the cause.

So back to Clinton and the notion that governments can fix
economies.
On rare occasions they can. Glass-Steagall was such an occasion
in 1933.
Since the accession of Bill Clinton in 1992, presidents have
been asleep at the wheel.
This includes both of the Obama terms.
Hilary Clinton in 2016 proposes to fix the economy by
adding another curlicue to the tax code in the form
of a minuscule two-year tax credit for companies to
encourage profit-sharing schemes.
Ms Clinton, stop addressing the wonks—it's time to think
big.
Make this the slogan of your campaign: "It's Glass-Steagall, stupid".

The Economist April 30, 2016; page 47: "Mario battles the Wutsparer"

Subtitle: "Thrifty Germans and Dutch are furious at low interest
rates, and the ECB"

Let's ignore the Dutch, as there are relatively few of them.
Instead, address one of those furious Germans.

To: Werner Wutsparer
From: Alexander Bender-Cramer
Date: May 23, 2016

It has been brought to my attention that you are enraged
at the ECB and that you blame it for the fact you only get
a measly one percent per year on the balance of your
savings account.
It is time you get informed about some basics of economics and
finance.

Your ignorance in this respect is understandable:
you grew up in a situation where these basics were
mercifully hidden behind illusions.
You grew up in a society that experienced economic growth
and was blessed with an financial sector that functioned
reasonably well.
Now growth has slowed.
Governments have allowed the financial sector to make its
duty to society secondary to the enrichment of its masters.
These changes have been in the making for decades,
but only manifested themselves in full force with
the financial crisis of 2008.

In the benign conditions in which you grew up
you entrusted your savings to an account with a bank
and you got what you considered a decent interest.
You chose to save rather than invest
because you wanted to be assured of a steady, positive return.

Did you ever wonder where the money for those admittedly modest
returns came from?
Suppose the bank didn't do anything else with your savings
than keep it ready for the day you would come to claim it for the down
payment of your house.
Then the bank would have to charge you for safekeeping
of your money.
How else could the bank pay for the handsome building
with well-groomed ladies and gentlemen ready,
or almost ready, to minister to your needs in matters financial?

No, you expect the money back at your convenience
and get a decent interest in the meantime.
Such magic is only possible if the bank to does not
keep your money but gives it to a borrower who can be
relied on to pay it back in time plus an interest high enough
to pay your interest, after subtracting the cost of the building,
the nice people who help you, and a bonus for the boss.

This whole business of finding suitable borrowers,
that is, people who are short of money now, but have plenty later,
is investing, something scary and risky,
which is what you did not want to get into.
You took your money to the bank to be saved and,
guess what, this cheat turned around and invested it.
In the benign decades of the second half of the 20th
century this arrangement
more or less worked (with some exceptions).
As a result the illusion of saving with a significant positive return
was upheld.

If it were just you, Werner, and not too many others among
you countrymen, then the problem of low
interest rates would not exist.
But your country as a whole is saving on a massive scale.
How massive? Here my sources differ. The Economist (April 30, 2016,
page 47) writes "Germans put aside 17% of their disposable income".
Elsevier (May 14, 2016, page 46) reports the ECB president as
saying "Germany has already a savings surplus of 5% for almost ten
years". Perhaps a percent "savings surplus" is something else
than a percent of "disposable income".

Whichever way you look at it, the disparity is huge.
On the scale of an economy, all saving has to be invested
right away.
German investors have not been able to find nearly enough suitable
German borrowers for ten years now.
Massive amounts of money needed to be lent to borrowers who
were not German or not suitable, or even both un-German and
unsuitable, the kind that say "Can't Pay, Won't Pay", as in
the play by (the Italian) Dario Fo.